Obamacare Trend = One Big National HC Exchange?

Politico is reporting an ironic trend in the U.S. health care market. What was intended to be 50 individual state-based health care exchanges is increasing trending toward one federally-run health care exchange. Thirty-six out of 50 states are already in the federal exchange and Politico reports that more states are considering dropping their own efforts and jumping into Healthcare.gov. This is a strange turn of events given that the federal exchange was meant to be a back-stop for states which could not or would not do the work of establishing their own exchanges.

Back when the ACA first began to go into effect, it looked as though some state-run exchanges were doing well and the federal exchange was floundering. It seemed that all anti-Obamacare politicians needed to do was let the feds handle the exchanges required under the law–and fail. For now anyway, the roles have reversed: states that opted to do their own exchanges are experiencing trouble as the federally-run exchange shows progress. Politico reports that:

Nevada in mid-May became the latest to scrap its system and opt into HealthCare.gov. A few days earlier, Oregon had bailed on its $250 million exchange. Massachusetts is still trying to salvage its exchange, but it’s also laying the groundwork to join HealthCare.gov.

Hawaii and Minnesota both insist they are moving ahead with their underperforming exchanges; skeptics predict they’ll have to jettison them and join the federal system sooner rather than later. And some small states with high-performing exchanges may have trouble keeping them over the long haul as federal financial support ends.

Connecticut’s exchange performed so well that Maryland wants to buy it and graft it onto its own broken one, but even the director of Connecticut’s exchange, Kevin Counihan, doubts that all the small states will be viable. “There’s going to be some consolidation there, some going to the federal exchange,” he predicted. “We don’t need 50 of these. And having this really functional federal exchange is really very, very desirable.”

Read more: http://www.politico.com/story/2014/06/republicans-obamacare-states-healthcare-gov-107290.html#ixzz33WzRLGLY

California and New York still appear to be on track. But could we end up with one national exchange + California + New York? That’s still not a single-payer system, but it is much more centralized than many Obamacare proponents would have dared hope for. A national exchange system could produce some considerable economies of scale (perhaps) by decreasing duplicative infrastructure. But there are costs worth considering as well. Greater centralized policy making could magnify the effects of policy error. As I said in a discussion of the Consumer Financial Protection Bureau: “Uniform [national] regulation…could impede discovery of best practices and the potential for individual state-level error could become nationwide error if (when?) regulators ‘get it wrong.’” Of course, as recent history shows, who knows what the health care landscape will look like even a year from now.




3 thoughts on “Obamacare Trend = One Big National HC Exchange?

  1. What I would be more interested in knowing, A.K., is why state exchanges are failing and why not the federal exchange? Is it not due to the increased amount of $ promised to develop the federal system, as well as President Obama’s legacy resting upon the success of it? If it is not for more dollars being pumped into the system and a bigger legacy, than what is reversing the trend?

  2. One of the things that is hurting the state exchanges is the size of the risk pool. The mistake of not decoupling health insurance from employment is that you are getting sick individuals, en masse, joining the exchanges. This is especially true in the smaller states (i.e., not California or New York) where a handful of individuals suffering from adverse health shocks will wreck the system.

    Moving to the federal exchange eliminates some of this problem, since you are increasing the size of the risk pool.

    Probably the only good thing to come from the ACA is the universal mandate. We are moving more towards a “Swiss” style health care system, though one that is a Frankenstein-like amalgamation of shitty parts welded together.

  3. Pingback: Another Obamacare Challenge | Economics & Institutions

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